Knorr-Bremse Sees Higher Profit Margin and Strong Cash Flow

  • Robust demand continues in both divisions in the first nine months of 2023: order intake rises to € 6.2 billion
  • Order book reaches a new record high of roughly € 7.2 billion
  • Knorr-Bremse’s revenue increases by a significant 12.7% to roughly € 5.9 billion
  • BOOST 2026 strategy program: efficiency increase measures show initial success; operating EBIT margin in third quarter rises to 11.5% (Q2/23: 11.1%)
  • Free cash flow in third quarter rises significantly to € 230 million (Q3/22: € 38 million) with a cash conversion rate of 168% (Q3/22: 25%)
  • Group confirms Guidance for 2023


Knorr-Bremse AG, the global market leader for braking systems and a leading supplier of other safety-critical rail and commercial vehicle systems, today published its results for the first nine months and third quarter of 2023.

Marc Llistosella, Chief Executive Officer of Knorr-Bremse AG: “We are fully on course to achieve our goals this year. Both our divisions performed very well in the first nine months of this fiscal year, and we are very satisfied with the demand, too. For us as a global market and technology leader, it shows impressively how much trust our global customers have in our products and solutions. In July, we launched our BOOST 2026 strategy update and now we are proceeding with our portfolio review by precisely analyzing the performance of our existing investments. Simultaneously, we are reducing our costs through targeted measures. We have a clear focus on our top priorities: margin development and cash flow.”

Frank Markus Weber, Chief Financial Officer of Knorr-Bremse AG: “We were able to achieve further pleasing revenue growth in the last three months. At € 1.9 billion, this represents an increase of 8% on the same quarter last year. Our greater profitability stems from the successful implementation of our Profit and Cash Protection Program (PCPP), which is part of BOOST 2026. Operating EBIT improved continuously and rose to € 224 million in the quarter just ended, with an operating EBIT margin of 11.5%. This development was bolstered by cost control measures and successful price negotiations. Thanks to an improved working capital and larger customer payments, we were able to significantly improve free cash flow to € 230 million and raise the cash conversion rate to almost 170 % in the third quarter of 2023.”

Strong Performance in the First Nine Months of the Year

The order intake at Knorr-Bremse AG in the first nine months of 2023 amounted to € 6,216 million (9M/22: € 5,917 million), again up on the previous year by a rate of 5.1%. This is primarily the result of a very clear recovery in demand in the commercial vehicle business in all regions. The positive order levels are also reflected in the 4.6% growth of the order book, producing a new record of approximately € 7,191 million as at September 30, 2023 (September 30, 2022: € 6,878 million). This ensures that capacity will be utilized robustly in the coming quarters. Consolidated revenues also rose in the first nine months of 2023, up 12.7% to € 5,856 million (9M/22: € 5,198 million), which is attributable to growth in the OE and aftermarket business of both segments.

The positive revenue development was complemented by the successful implementation of cost control measures as well as successful price negotiations with customers and improved working capital management, contributing to the improvement in the operating EBIT margin and free cash flow. The operating EBIT margin in the first nine months of 2023 was 10.9% and remained at the previous year’s level (9M/22: 10.9%). Operating EBIT improved from € 568 million in the previous year’s quarter to € 639 million. The positive development of free cash flow, which was € 34 million in the second quarter of 2023, continued in the third quarter at € 230 million thanks to the crossdivisional “Collect” project for systematically improving net working capital. This is an exponential increase on the previous year’s quarter (Q3/22: € 38 million). Free cash flow thus improved significantly in the first nine months of the year, rising to € 65 million from € 229 million in the same period last year.

Rail Vehicle Systems: Strong Developments in Customer Demand and Order Intake

The Rail Vehicle Systems (RVS) division is performing very positively in all markets. Its revenue, at € 2,746 million in the first nine months of 2023, has risen by a significant 11.9% year over year (9M/22: € 2,453 million) thanks to increases in volumes and prices. Order intake was up 1.3% at € 3,044 million (9M/22: € 3,006 million) and the order book as at September 30, 2023, had reached a new record of € 5,168 million (September 30, 2022: € 4,844 million).

Despite the increase in sales volumes, the division only recorded a slight 3.8% increase in operating EBIT to € 387 million, compared with the previous year’s corresponding figure of € 373 million. The operating EBIT margin of 14.1% was 1.1 percentage points below the previous year’s figure (9M/22: 15.2%). The main factor influencing this is the longer-term original equipment contracts that were won before the Russian invasion of Ukraine and, accordingly, before the significant rise in inflation. These contracts do not allow inflation-related cost increases to be passed on. Price adjustments for new orders and cost control measures have only been able to partially offset the inflation-related cost increases. The positive effects from new contracts will already become noticeable over the next year through the gradual reduction of existing orders on old pricing terms.

As a key supplier of the rail industry, Knorr-Bremse places an emphasis on developing and enhancing innovative and leading solutions for maximum safety, increased availability, efficiency, and punctuality in rail transportation. With the latest generation of the CubeControl product, the world’s most frequently installed brake control, Knorr-Bremse is again putting into use a high-quality technology as an update of a successful product. Knorr-Bremse has signed a contract for it with Alstom to equip a fleet of Swedish high-speed trains starting in 2024, with an order value in the lower two-digit million range. The enhanced CubeControl integrates numerous components in an even better way, enabling a smarter interaction of electropneumatic, mechatronic, and software technologies. The Alstom order is planned to run until 2028.

Commercial Vehicle Systems: Robust Quarterly Performance and Further Concentration on Innovation Capabilities

The order intake in the Commercial Vehicle Systems (CVS) division in the first nine months of 2023 amounted to € 3,174 million (9M/22: € 2,913 million) and displayed a normalization at a high level in the third quarter of 2023 following record intake in the preceding quarters. The order book, at € 2,024 million as at September 30, 2023, remains stable in comparison with the same period the previous year (September 30, 2022: € 2,035 million), which is primarily attributable to the high demand in Europe and Asia. Revenue development has been particularly positively influenced by the stable truck production figures in Europe and North America, the significant increase in China, and successful price adjustments. The division’s revenue increased by a significant amount once again, up 13.3% to € 3,112 million (9M/22: € 2,747 million).

As expected, profitability developed positively as the quarter progressed, with operating EBIT in the CVS division improving in the third quarter of 2023 to € 107 million (Q3/22: € 87 million) to make for € 300 million in the first nine months of the year (9M/22: € 237 million). The operating EBIT margin was 10.6% after 9.2% in the previous year’s quarter and 9.3% in the second quarter of 2023. The price negotiations and cost control measures that were successfully wrapped up or implemented recently already had a positive influence in the quarter just ended and will continue to do so in the following quarters.

Knorr-Bremse announced in October that it will continue its eCUBATOR innovation unit, established in 2020, beyond 2023 to strengthen Knorr-Bremse’s long-term capabilities. The team at this unit drive innovation and development in the field of e-mobility. Many of the market-oriented products in the categories of air supply, brake control, and wheelend that were developed in the eCUBATOR so far can now be transitioned to regular business operations. In the future, the eCUBATOR team will have an even more intensive focus on new business fields that are related to zero-emission vehicles and offer excellent growth opportunities for Knorr-Bremse.

BOOST 2026 Program: Progress Being Made on Measures to Increase Efficiency and Resilience

In July, as part of its strategy update, Knorr-Bremse launched its BOOST 2026 program (Knorr-Bremse Operational Optimization Strategy and Transformation) with an array of strategic initiatives centering on the three action areas of “products, people, and processes.” One of the main targets is to permanently raise the EBIT margin to over 14% by 2026. A strengthening of the company’s resilience as well as its innovation and technology capabilities are also clearly defined objectives of the BOOST program.

A contribution to this is also being made by, among other things, research and development investment in the form of an expansion of the Knorr-Bremse Technology Center India (TCI), located in Pune, India. Knorr-Bremse is pursuing a growth strategy in both its rail and commercial vehicle divisions in India, which is an emerging transportation market, as well as other key markets. The new TCI will see a planned 1,300 experts driving the development of innovative and pioneering transportation technologies, primarily in the fields of engineering, hardware, software, IT, and simulation, for the rail and commercial vehicle markets for the benefit of the Knorr-Bremse Group’s sites globally.

Executive Board Membership: Continuity and Stability Ensured

The Supervisory Board of Knorr-Bremse AG has ensured the continuity and stability of the full Executive Board with its latest membership decisions. Dr. Nicolas Lange, the long-standing Chairman of the Management Board of Knorr-Bremse Systeme für Schienenfahrzeuge GmbH, was appointed to the full Executive Board with responsibility for Rail Vehicle Systems as of October 1, 2023, replacing Dr. Jürgen Wilder following the latter’s departure.

Moreover, the Supervisory Board has extended the contract of chief human resources officer Dr. Claudia Mayfeld for a further five years with effect from May 2024, doing so prior to her contract’s expiration and thus ensuring in particular that the ongoing transformation process in the corporate culture is maintained with consistency. Claudia Mayfeld continues to have global responsibility for HR, Integrity, Legal Affairs, IP, and Data Protection.

Group Confirms Guidance for 2023

The company is confirming its guidance for the 2023 fiscal year. Assuming that exchange rates remain as they are, that the geopolitical and macroeconomic environments remain mostly stable, that there are no new Covid-19 lockdowns, that inflation-related cost increases are compensated for and that there are no additional supply chain issues caused by potential energy shortages, the company expects revenue between € 7,500 million and € 7,800 million, an operating EBIT margin of 10.5% to 12.0% and free cash flow from € 350 million to € 550 million for the 2023 fiscal year.



The full quarterly report is available on the website under Investor Relations . Explanations and reconciliations of the financial KPIs used can be found in the 2022 annual report of Knorr-Bremse AG .

Key figures for the Knorr-Bremse Group

 January to September 2023
€ million
January to September 2022
€ million
ΔThird quarter 2023
€ million
Third quarter 2022
€ million
Order intake6,2165,917+5.1%1,9801,879+5.4%
Order book (September 30)7,1916,878+4.6%7,1916,878+4.6%
EBITDA margin15.0%14.8%+20 bp15.7%15.5%+20 bp
Operating EBITDA margin15.2%15.2%+/–0 bp15.7%15.7%+/–0 bp
EBIT margin10.6%10.4%+20 bp11.5%11.2%+30 bp
Operating EBIT margin10.9%10.9%+/–0 bp11.5%11.3%+20 bp
Free cash flow65–229+128.3%23038+513.5%
Capital expenditure (before IFRS16 and acquisitions)222226–1.9%8386–3.3%
R&D costs as % of revenues6.5%6.7%–20 bp6.6%6.5%+10 bp
Earnings per share (in EUR)2.302.32–0.020.790.90–0.11

Key figures Rail Vehicle Systems division (RVS)

 January to September 2023
€ million
January to September 2022
€ million
ΔThird quarter 2023
€ million
Third quarter 2022
€ million
EBITDA margin18.1%18.2%–10 bp18.0%19.1%–110 bp
Operating EBITDA margin18.0%19.2%–120 bp18.0%19.4%–140 bp
EBIT margin14.0%14.2%–20 bp14.4%15.2%–80 bp
Operating EBIT margin14.1%15.2%–110 bp14.4%15.6%–120 bp

Key figures Commercial Vehicle Systems division (CVS)

 January to September 2023
€ million
January to September 2022
€ million
ΔThird quarter 2023
€ million
Third quarter 2022
€ million
EBITDA margin13.2%12.5%+70 bp14.5%13.2%+130 bp
Operating EBITDA margin13.5%12.5%+100 bp14.6%13.2%+140 bp
EBIT margin9.2%8.6%+60 bp10.5%9.2%+130 bp
Operating EBIT margin9.6%8.6%+100 bp10.6%9.2%+140 bp